Last week, CNN Money reported that Apple sales hit a record high of $46 billion during the holiday season by selling 46 million iPhones, 15.4 million iPads, 5.2 million Macs, and 15.4 iPods. Apple retail sales now account for a large percentage of retail sales in the U.S., perhaps as high as “one-fifth of all sales growth by publicly traded retailers in the U.S.” The problem with these rosy numbers, as noted by Fareed Zakaria in his most recent TIME Magazine column, is that these hot products are being manufactured in China rather than in the U.S. This highlights a core problem, that America lacks a robust American manufacturing policy.
There is a need for Apple and other companies to bring their factories to the U.S. to create jobs, so it is time for the government to develop a sustainable American manufacturing policy.
Based on President Obama’s State of the Union address, the White House seems to have gotten the message about working on reinvigorating America’s manufacturing policy. “We have a huge opportunity, at this moment, to bring manufacturing back,” President Obama said. “But we have to seize it. Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed.”
It's not impossible for Apple to bring its manufacturing to the U.S. There is a trend among U.S. companies to make the shift. According to a survey done by MFG.com in November 2011, about one in five U.S. companies have brought back their manufacturing from a “low cost” country – like China – which is an improvement from one in ten in the previous survey. One of the main reasons for this shift is the rising cost of labor in China and shipping costs on the global market.
Will Apple and company bring back manufacturing jobs from China? Maybe. In Steve Jobs’ official biography, Jobs tells President Obama that one of the reasons that he hasn’t brought back jobs from the overseas market is because there isn’t a sufficient pool of trained engineers to oversee the production of Apple products and that “[y]ou can’t find that many Americans to hire.”
Beyond a question of human capital, there is a question of public relations for Apple. Its partner in China, Foxconn Technology Group, has come under scrutiny for mistreating its employees in China by forcing them to work long hours, with low pay, and exposing them to a hazardous working environment. Many American consumers don’t approve of this type of business malpractice as noted by the letters to the editor sent to the New York Times. This problem is not just an isolated one, as there are numerous reports to be found on the deplorable state of working conditions in China, so there may be a chance and need to Americanize Apple products after all – as U.S. working conditions and legal protection for industrial workers are among the best in the world.
It won’t be easy. Zakaria was right in noting that “Economists tell us it’s a complex matter involving tax, trade and regulatory policy, exchange rates and educational skills.” The fact the some manufacturing has been brought to the U.S. tells us that these factors can be overcome with diligence and willingness to explore a course of action to address the education deficit and other complex policy issues.
State capitalism is unappealing to many – including Zakaria, The Economist, and all adherents of Adam Smith – but one must at least consider some form of assertive support from the U.S. government to its companies in a time when so many others do the same. Surely there can be a compromise between the two camps for America. Why not limit government support by having a tight prescription under the law, which will narrowly define measures that can be taken.
There’s a need to try to find a way to Americanize the products that we buy – from Apple and other U.S companies – whether it’s for bringing about a stronger economic recovery or making ethical business practice a reality. Though the recent jobs report from the Labor Department is comforting – as it noted that unemployment in the U.S. is at a three year low – there remains a need to push for a robust American manufacturing policy. America needs American-made goods.
Photo Credit: nechbi